I had an interesting email exchange with my opposite number at British Columbia’s leading business magazine the other day. We’re working together on a project for December that will feature coverage of pipelines to the British Columbia coast: the politics, the environmental, social and economic effects – the whole deal.

We’ve developed some great content, and there are lots of interesting issues and opinions out there. But, near the end of the project, an interesting divergence in our world views became apparent. He felt that in any negotiations between Alberta and B.C. regarding pipelines to the coast, B.C. held all the cards. It struck me that that might be true in a limited sense – for but one of the games in town, and not even the biggest one. To Alberta’s oil and gas industry, and therefore to a great many of its people and its politicians, pipelines to the B.C. coast have become a sideshow.

Northern Gateway? Sure, Enbridge Inc. wants it, and it would help the industry – in the sense that every little bit helps – but the project has been mostly written off as being highly unlikely, at least within the time frame that the vast majority of businesspeople think. Kinder Morgan’s TransMountain? Again, small potatoes. (Although, as pipelines go, you’d think this one would get the go-ahead. The right of way is already there. All this project needs is a larger facility in Burnaby, B.C. How anti-industrial have we become?)

Keystone XL is a bigger deal, but Alberta’s oil and gas industry, driven as it is by the biggest companies in the world, thinks on a much larger scale still. The concern that dwarfs all others? The actual price of oil, which has fallen by 25% since June. It’s now down to the low US$80s. That’s causing pain to the industry (and to government – Premier Jim Prentice is going to have to curtail the goodies he hands out in the lead-up to the next general election). On the upside, from the point of view of Alberta’s industry, any prolonged price depression is going to see shale-gas production in the U.S. plummet as companies already short of cash cut output. That will restrict supply, and gradually push prices back up.

Other top concerns: Will OPEC close the spigot to keep revenue up, or keep it wide open to protect market share? (For now, it’s the latter.) What’s going to happen to the U.S.’s and China’s economies? And Europe’s? What will Russia do?

In the meantime, moves are afoot to launch Energy East. New Brunswick’s Irving Oil Ltd. wants it for its refinery in Saint John, N.B. Several major U.S. refineries are increasing their capacity to handle Alberta’s heavy crude, so that will drive up demand some. Oil by rail also continues to ramp up – an unfortunate byproduct of pipeline politics.

B.C. and Alberta are likely to work together in some manner to get more of Alberta’s oil to B.C.’s coast. Prentice has held an olive branch out to B.C. Premier Christy Clark, and progress on the file is expected. But Clark should be careful of trying to overplay her hand.

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